Cloudflare is in between the client and the server, decrypting, rewriting and (if set up right) re-encrypting the request/response. It masquerades as the server by presenting a proper certificate for the domain even though it is not the entity that is actually controlling the domain.

That to me sounds very much like MITM, although it is not a MITM attack since the entity controlling the domain opted into it, so basically it is voluntary MITM.

Using a VPS like EC2 is a different story since the decryption happens within the layer that you control. Of course you need to make sure that you choose a vendor for that layer that you trust, but on EC2 the traffic that amazon sees is encrypted with keys they don't have and decrypted with keys stored on a layer that I control. Amazon could read out the memory of my EC2 to get the keys but their business depends on not doing so, so in this case either I have a vendor that always will decrypt and read traffic (Cloudflare), or a vendor whose business depends on hypothetically being able to but not doing it. There is a clear difference to me.

That is the same for most CDN's (including CloudFront and all the other major offerings), so I'm not trying to single out Cloudflare.